2020 quartely report september 30, un-audited
TRANSCRIPT
T: 92 42 3576 0381 F: 92 42 3576 0376
SURAJ COTTON MILLS LIMITED
08 Condensed Interim Statement of Profit or Loss (Un-Audited)
09 Condensed Interim Statement of Comprehensive Income (Un-Audited)
10 Condensed Interim Statement of Changes in Equity (Un-Audited)
11 Condensed Interim Statement of Cash Flows (Un-Audited)
12 Selected Notes to the Condensed Interim Financial Statements (Un-Audited)
GOVERNANCE
Company Information
(Chairman)
Chief Financial Officer Muhammad Naeem Sheikh
Audit Committee Humayun Maqbool (Chairman)
Ahsan Bashir (Member)
Adil Bashir (Member)
Adil Bashir (Member)
Humayun Maqbool (Member)
Share Registrar Corptec Associates (Pvt) Ltd. 503 -E,Johar Town , Lahore
Auditors Riaz Ahmad & Co. Chartered Accountants
Company Secretary Haseeb Ahmad
Bankers Allied Bank Limited Habib Bank Limited MCB Bank Limited National Bank of Pakistan MCB Islamic Bank Limited United Bank Limited Dubai Islamic Bank Limited Habib Metropolitan Bank Limited Samba Bank Limited FINCA Microfinance Bank Limited
Registered Office 7-B-III, Aziz Avenue, Gulberg-V, Lahore.
Ph: +92-423-5760379, 35760382 Fax: +92-423-5760376 Email: [email protected] Web: www.suraj.com
Project Locations Nooriabad, District Dadu, Sindh. Kotla Kahloon, District Nankana Sahib, Punjab. Bhaikot, Rawind, District Lahore, Punjab.
3
Directors’ Report
On behalf of Board of Directors, I am pleased to present the operating and financial performance of the company for the first quarter of Financial Year 2021 ended on 30 September 2020.
Pakistan’s economy is showing signs of growth and stability after the COVID-19 pandemic and the textile sector has shown tremendous resilience. Other sectors have also shown a healthy recovery. For the current financial year (FY 2020-21) we hope that the growth cycle will continue and are optimistic about the future outlook.
This pattern is evident in the operating results of your company for the first quarter of FY2021. Compared with the corresponding period, company has achieved revenue growth of 18.27% and financial charges dropped by almost 30% due to recent drop in Policy Rate by SBP. The Company has witnessed a 53.4% increase in profit after tax. Earnings per share for this quarter are 10.16 (FY 2020: PKR 7.10).
Following is the summary of Income Statement for first quarter of FY 2021:
Income Statement Q1 FY-2021 Q1 FY-2020 % Change
(PKR in Million)
Profit before taxation 446 320 39.27%
Taxation (73) (60) 22.07%
Net Profit 373 260 53.40%
Earnings per Share (EPS) 10.16 7.10 Other income increased by 128% on account of realized and unrealized gains due to recovery in the Pakistan equity markets. This recovery is largely due to positive economic fundamentals discussed above. Going for- ward, we expect this positive sentiment to persist and economic activity to gain further momentum.
The new cotton season has started and initial indications show the crop to be far below expectations and it is doubtful that last season’s low crop outturn will be achieved. Inherent issues in the crop cultivation and seed methodology remain with no progress towards any resolution. With the demand for raw cotton ex- pected to be at optimum levels due to improvement in textile demand, it is certain that mills will have to rely on imported cotton to meet their requirements. Pakistan spinning industry has already contracted for large scale imports from nearly all origins in the world. It is imperative that this problem is resolved through new seeds and technology.
A competitive exchange rate parity and fears of COVID-19 in our neighboring countries has made Pakistan prime choice for sourcing textile products globally; strengthening demand in Pakistan. The textile sector is running at full capacity with no dearth of orders and we expect that for the near future demand will remain strong.
In line with our policy of investments in new technology and to take advantage of economies of scale, the Company has decided to set up additional weaving capacity comprising of 154 wide width, high speed looms. Currently we are operating with 120 Looms of same category in our weaving unit producing ap- proximately 15 Million Meters fabric annually and with this addition, our production capacity for fabric would increase by 128%. We expect that this project will be a profitable addition with a payback of about 7 years. Site for the proposed unit is adjacent to the current facilities and is equipped availability of utilities and the necessary technical expertise under one roof. It is expected that the unit will be operational by mid 2021.
4 QUARTERLY REPORT SEPTEMBER 30, 2020
We are committed to focus on our core competencies and our managerial expertise for risk management and continue to try and perform as per the expectations of stakeholders. We are always looking for new op- portunities to expand and diversify and shall keep you apprised of our efforts.
Acknowledgements
On behalf of the Board of Directors, I would take this opportunity to thank all our partners and employees for their continued support. I would also take this opportunity to express my gratitude to the Board for their valuable insights and guidance.
Nadeem Maqbool Chief Executive
October 28, 2020 Lahore
7
8 QUARTERLY REPORT SEPTEMBER 30, 2020
Condensed Interim Statement of Financial Position As At September 30, 2020
Un-Audited Audited
shares of Rupees 10/- each 500,000 500,000
Issued, subscribed and paid up share capital 4 366,713 366,713
Reserves 6,750,230 6,249,900
Deferred taxation 209,633 209,633
Accrued mark-up 28,987 38,592
Unclaimed dividends 6,387 6,731
2,994,301 3,651,369
TOTAL EQUITY AND LIABILITIES 12,801,375 13,011,465
The annexed notes form an integral part of this interim financial information.
CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICERDIRECTOR
9
Investment properties 100,000 100,000
Long term deposits 9 21,871 21,871
5,955,016 5,879,539
Current assets
Stock in trade 11 2,918,119 3,718,268
Trade debts 12 1,268,819 974,012
Loans and advances 13 62,524 55,137
Short term deposits and prepayments 87,238 74,125
Tax refunds due from the government 388,263 537,190
Other receivables 27,592 29,624
6,839,693 7,117,734
6,846,359 7,131,926
September 30,
Gross Profit 505,555 451,320
118,802 124,532
386,753 326,788
Taxation 22 73,212 59,975
Earnings per Share - Basic and diluted (Rupees) 10.16 7.10
The annexed notes form an integral part of this interim financial information.
Condensed Interim Statement of Profit or Loss (Un-Audited) For The Period Ended September 30, 2020
CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICERDIRECTOR
11
Other comprehensive income / (Loss):
Items that will not be reclassified to profit or loss:
Surplus / (deficit) arising on remeasurement of investments at fair value through other comprehensive income 127,664 (14,933)
Items that may be reclassified subsequently to profit or loss
Other comprehensive income / (loss) for the period - net of tax 127,664 (14,933)
Total comprehensive income for the period 500,330 245,257
The annexed notes form an integral part of this interim financial information.
Condensed Interim Statement of Comprehensive Income (Un-Audited) For the period ended September 30, 2020
CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICERDIRECTOR
12 QUARTERLY REPORT SEPTEMBER 30, 2020
Share Capital
Sub total
---------------------------------------------------(Rupees in thousand)--------------------------------------------------
Balance as at 30 June 2019 - (Audited) 366,713 29,000 (240,964) (211,964) 3,714,000 2,199,229 5,913,229 5,701,265 6,067,978
Transactions with owners:
Final dividend for the year ended 30 June 2019 @ Rupees 5.00 per share - - - - - (183,357) (183,357) (183,357) (183,357)
Transfer of gain on disposal of investments held at FVTOCI to retained earnings - - (1,047) (1,047) - 1,047 1,047 - -
Profit for the period - - - - - 719,549 719,549 719,549 719,549
Other comprehensive loss for the period - restated - - 12,443 12,443 - - - 12,443 12,443
Total comprehensive income for the period - - 12,443 12,443 - 719,549 719,549 731,992 731,992
Balance as at 30 June 2020 - (Audited) 366,713 29,000 (229,568) (200,568) 3,714,000 2,736,468 6,450,468 6,249,900 6,616,613
Profit for the period - - - - 372,666 372,666 372,666 372,666
Other comprehensive income for the period - - 127,664 127,664 - - - 127,664 127,664
Total comprehensive income for the period - - 127,664 127,664 - 372,666 372,666 500,330 500,330
Balance as at 30 September 2020 - (Un-Audited) 366,713 29,000 (101,904) (72,904) 3,714,000 3,109,134 6,823,134 6,750,230 7,116,943
The annexed notes form an integral part of this interim financial information.
Condensed Interim Statement of Changes in Equity (Un-Audited) For the period ended September 30, 2020
CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICERDIRECTOR
13
September 30, 2020
September 30, 2019
(Rupees in thousand) CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation 445,878 320,165 Adjustment for non-cash and other items: Depreciation 114,131 123,370 Gain on disposal of property, plant and equipment (8,880) - Net (gain) on short term investment (17,291) (19,610) Provision for Workers' Profit Participation Fund 24,122 - Provision for Workers' Welfare Fund 9,167 - Profit on bank deposits (3,641) - Dividend income (27,914) (13,242) Exchange (gain) / loss (4,345) - Finance cost 32,820 46,870 Cash flows from operating activities before working capital changes 564,047 457,553
Effect on cash flow due to working capital changes (Increase) / decrease in current assets: Stores, spares and loose tools 21,232 18,611 Stock in trade 800,149 708,914 Trade debts (290,462) (178,960) Loans and advances (7,387) (21,902) Trade deposits and short term prepayments (13,113) (21,266) Other receivables 2,032 3,846 Increase in current liabilities: Trade and other payables 32,525 66,567 Net cash from /(used in) working capital 544,976 575,810 Cash generated from /(used in) operations 1,109,023 1,033,363
Finance cost paid (42,425) (40,221) Workers' profit participation fund paid (45,788) - Profit on bank deposits received 3,641 - Income tax paid 75,715 39,619 Net cash from /(used in) operating activities 1,100,166 1,032,761
CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditure incurred (5,532) (11,513) Proceeds from disposal of property, plant and equipment 19,155 - Investments - net (426,714) (1,144,872) Dividend received 27,914 13,242 Net cash used in investing activities (385,177) (1,143,143)
CASH FLOWS FROM FINANCING ACTIVITIES Long term financing - net (1,125) (63,580) (Decrease)/ increase in short term borrowings - net (719,372) (88,866) Dividend paid (344) - Net cash / (used in) from financing activities (720,841) (152,446) Net Increase (Decrease) in Cash and Cash Equivalents
(5,852) (262,828)
Cash and Cash Equivalents at the Beginning of the Period 207,139 433,938 Cash and Cash Equivalents at the End of the Period 201,287 171,110
The annexed notes form an integral part of this interim financial information.
Condensed Interim Statement of Cash Flows (Un-Audited) For The Period Ended September 30, 2020
CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICERDIRECTOR
14 QUARTERLY REPORT SEPTEMBER 30, 2020
1. THE COMPANY AND ITS ACTIVITIES
Suraj Cotton Mills Limited (‘the Company’) was incorporated in Pakistan as a public limited company under the Companies Act, 1913 (now Companies Act, 2017) and is listed on Pakistan Stock Exchange Limited. Its registered office is situated at 7-B-3, Aziz Avenue, Gulberg-5, Lahore. The Company is engaged in the manufacturing, sale and trading of yarn, and fabric.
2. BASIS OF PREPARATION
2.1 These condensed interim financial statements have been prepared in accordance with the account- ing and reporting standards as applicable in Pakistan for interim financial reporting. The accounting and reporting standards as applicable in Pakistan for interim financial reporting comprise of:
• International Accounting Standard (IAS) 34, Interim Financial Reporting, issued by the International Accounting Standards Board (IASB) as notified under the Companies Act, 2017; and
• Provisions of and directives issued under the Companies Act, 2017.
• Where the provisions of and directives issued under the Companies Act, 2017 differ with the requirements of IAS 34, the provisions of and directives issued under the Companies Act, 2017 have been followed.
2.2 These condensed interim financial statements do not include all the information and disclosures required in annual financial statements and should be read in conjunction with the annual audited financial statements of the Company for the year ended 30 June 2020. These condensed interim financial statements are un-audited, however, have been subjected to limited scope review by the auditors and are being submitted to the shareholders as required by the Listed Companies (Code of Corporate Governance) Regulations, 2019 and Section 237 of the Companies Act, 2017.
3. ACCOUNTING POLICIES
The accounting policies and methods of computations adopted for the preparation of these condensed interim financial statements are the same as applied in the preparation of the preceding audited annual published financial statements of the Company for the year ended 30 June 2020.
3.1 Critical Accounting Estimates and Judgements
The preparation of these condensed interim financial statements in conformity with the approved accounting standards requires the use of certain critical accounting estimates. It also requires the management to exercise its judgment in the process of applying the Company’s accounting policies. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
During preparation of these condensed interim financial statements, the significant judgments made by the management in applying the Company’s accounting policies and the key sources of estimation and uncertainty were the same as those that applied in the preceding audited annual published financial statements of the Company for the year ended 30 June 2020.
Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
15
Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
5. LONG TERM FINANCING - secured Opening balance 2,590,654 2,822,597
Acquired/(repaid) during the period / year (1,125) (231,943)
2,589,529 2,590,654
2,480,498 2,533,850
6. TRADE AND OTHER PAYABLES Creditors 474,760 497,864 Advances from customers 51,668 41,902 Accrued liabilities 1,688,613 1,633,950 Payable to employees' provident fund trust 118 12 Income tax deducted at source 3,217 2,573 Fair value of forward exchange contracts - 9,550 Workers' profit participation fund 24,122 45,788 Workers' welfare fund 48,405 39,238
2,290,903 2,270,877
Un-Audited Audited
Un-Audited Audited
No of Shares in Thousand
17,400 17,400 Ordinary shares of Rupees 10 each fully paid up in cash
174,000 174,000
Ordinary shares of Rupees 10 each issued as fully paid bonus shares
19,271 19,271 192,713 192,713
36,671 36,671 366,713 366,713
7. CONTINGENCIES AND COMMITMENTS
Contingencies
i) Guarantees of Rupees 52.277 million (2020: Rupees 47.277 million) are given by the banks of the Company to Sui Northern Gas Pipelines Limited against gas connections, Director Excise and Taxation, Karachi against infrastructure cess and others.
Commitments
i) Contracts for capital expenditure are approximately of Rupees 20.000 million (2020: 20.000 million).
ii) Letters of credit other than for capital expenditure are of Rupees 55 million (2020: Rupees 163.723 million).
iii) Outstanding foreign currency forward contracts are of Rupees NIL (2020: 158.550 million).
Un-Audited Audited September
2020 Note ( Rupees in thousand )
8. PROPERTY, PLANT AND EQUIPMENT Operating fixed assets - tangible 8.1 4,829,185 4,940,565 Capital work-in-progress 8.2 71,108 71,076
4,900,293 5,011,641
8.1 Operating fixed assets - tangible Opening book value 4,940,565 5,327,574 Add: Additions during the period / year -cost 8.1.1 5,500 133,678
4,946,065 5,461,252 Less: Deletions during the period / year - vehicles (2,749) (21,057)
4,943,316 5,440,195 Less: Depreciation during the period / year 114,131 (499,630) Book value at the end of the period / year 4,829,185 4,940,565
8.1.1 Additions during the period / year - cost Plant and machinery 4,000 77,441 Electric installation - 17,642 Vehicles 1,500 38,595
5,500 133,678
8.1.2 Capital Work in Progress Buildings on freehold land 29,457 29,425 Plant and machinery 31,109 31,109 Electric installations 10,542 10,542
71,108 71,076
Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
17
Note ( Rupees in thousand )
9. LONG TERM INVESTMENT Investments in joint ventures - under equity method 70,883 70,883
Equity instruments - at FVTOCI 861,969 675,144
932,852 746,027
10. STORE , SPARE PARTS AND LOOSE TOOLS Stores 212,120 217,644
Spares parts 8,019 11,205
Loose tools 193 250
Stores in transit 2,384 14,849
222,716 243,948 Less: Provision for slow moving, obsolete and damaged store items
(40,306) (40,306)
182,410 203,642
Raw material 1,805,322 2,182,402
Finished goods 852,797 1,346,739
12. TRADE DEBTS Secured against letters of credit 53,160 43,788
Unsecured 1,301,666 1,016,231
1,268,819 974,012
Advances to suppliers 48,167 41,555
Letters of credit 5,391 7,009
Due from related parties 2,859 62
62,524 55,137
14. INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS Equity investments 14.1 152,684 150,502
Mutual funds 14.2 1,550,757 1,168,095
1,703,441 1,318,597
Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
18 QUARTERLY REPORT SEPTEMBER 30, 2020
Un-Audited Audited September
Note ( Rupees in thousand )
14.1 Securities held at fair value through profit or loss Carrying value 124,273 126,621 Unrealised gain / (loss) 28,411 23,881
152,684 150,502
14.2 Mutual funds HBL Cash Fund 285,590 181,681 Alfalah GHP Money Market Fund 208,163 204,561 MCB Cash Management Optimizer 248,721 245,034 NBP Money Market Fund 188,131 185,548 ABL Cash Fund 180,393 177,842 ATLAS Money Market Fund 175,759 173,429 UBL Asset Management 264,000 -
1,550,757 1,168,095
Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
19
-------------------------- ( Rupees in Thousand ) --------------------------
Inter Segments (619,977) - (619,977) (609,899) - (609,899)
2,678,798 1,372,005 4,050,803 2,157,707 1,267,231 3,424,938
15.1 Disaggregation of the Company's revenue from contracts with customer is as follows.
Segments
Sale of waste 150,699 5,044 155,743 192,995 6,966 199,961
Inter-segment eliminations (619,977) - (619,977) (609,899) - (609,899)
Total revenue from contracts with customers 2,678,798 1,372,005 4,050,803 2,157,707 1,267,231 3,424,938
Geographic markets
China - - - 115 115
Portugal 18,300 18,300 -
South Korea - 5,245 5,245 -
2,678,798
1,372,005
4,050,803
2,157,707
1,267,231
3,424,938
Timing of revenue recognition
Goods transferred at a point in time 2,678,798 1,372,005 4,050,803 2,157,707 1,267,231 3,424,938
Total revenue from contracts with customers
2,678,798
1,372,005
4,050,803
2,157,707
1,267,231
3,424,938
Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
20 QUARTERLY REPORT SEPTEMBER 30, 2020
Un-Audited September
( Rupees in thousand )
16. COST OF SALES Raw material consumed 2,252,164 2,521,289 Sizing expenses 15,383 18,324 Stores, spares and loose tools consumed 67,237 69,955 Packing materials consumed 35,816 35,631 Salaries, wages and other benefits 238,204 237,019 Fuel and power 340,185 377,775 Repairs and maintenance 19,640 13,434 Insurance 7,781 7,461 Other factory overheads 5,492 5,428 Depreciation 107,053 116,676
3,088,955 3,402,992
Finished goods:
Clearing and forwarding 1,273 1,273
Export development surcharge 236 109
36,762 32,381
Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
21
30, 2019 ( Rupees in thousand )
18. ADMINISTRATIVE EXPENSES Salaries and other benefits 27,489 27,011 Rent, rates and taxes 2,559 1,748 Electricity and gas 2,570 2,202 Traveling and conveyance 777 2,785 Repair and maintenance 2,031 1,226 Vehicle running and maintenance 1,616 1,884 Printing and stationery 538 1,642 Communication 568 479 Fee and subscription 1,009 883 Insurance 692 581 Depreciation 7,077 6,695 Entertainment 64 27 Donation 15 5,000
47,005 52,163
19. OTHER OPERATING EXPENSES Workers profit participation fund 24,122 17,195 Workers welfare fund 9,166 6,534 Impairment loss on short term investment - 14,416 Others 1,747 1,843
35,035 39,988
20. OTHER OPERATING INCOME Exchange gain / (loss) 4,345 - Profit on bank deposits 3,641 5,095 Dividend income 27,914 32,852 Net gain on short term investment 17,291 - Sale of empties and scrap 1,463 2,300 Gain on disposal of operating fixed assets 8,880 - Unrealised gain on re-measurement of investments at fair value through profit or loss 28,411 -
91,945 40,247
21. FINANCE COST Interest / mark-up on: Long term financing 17,216 23,470 Short term borrowings 13,323 21,919 Bank charges and commission 2,281 1,481
32,820 46,870
73,212 59,975
Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
22 QUARTERLY REPORT SEPTEMBER 30, 2020
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Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
23
Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
24 QUARTERLY REPORT SEPTEMBER 30, 2020
24. RECOGNIZED FAIR VALUE MEASUREMENTS - FINANCIAL INSTRUMENTS
(i) Fair value hierarchy
Judgements and estimates are made in determining the fair values of the financial instruments that are recognised and measured at fair value in these condensed interim financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the following three levels. An explanation of each level follows underneath the table.
Recurring fair value measurements at 30 September 2020 - Un-audited
Level 1 Level 2 Level 3 Total
( Rupees in Thousand )
2,565,210 - - 2,565,210
Level 1 Level 2 Level 3 Total
( Rupees in Thousand )
1,993,541 - - 1,993,541
The above table does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amounts are a reasonable approximation of fair value. Due to short term nature, carrying amounts of certain financial assets and financial liabilities are considered to be the same as their fair value. For the majority of the non-current receivables, the fair values are also not significantly different to their carrying amounts.
Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
25
There were no transfers between levels 1 and 2 for recurring fair value measurements during the half year ended 31 December 2019. Further there was no transfer in and out of level 3 measurements.
The Company’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.
Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and equity securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the Company is the current bid price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities.
(ii) Valuation techniques used to determine level 1 fair values
Specific valuation technique used to value financial instruments was use of quoted market prices.
25. TRANSACTIONS WITH RELATED PARTIES The related parties comprise associated companies, key management personnel and provident fund trust. The Company is in the normal course of business carries out transactions with various related parties. Detail of transactions with related parties are as follows:
Period Ended September
30, 2020 September
i) Transactions Associated companies
Purchase of electricity 1,472 92 Sale of goods 11,642 16,061 Purchase of goods 8,058 34,480 Insurance expense 28,901 37,164 Key management personnel Remuneration paid to Chief Executive Officer, Director 11,986 11,030 Other related parties Company’s contribution to provident fund trust 6,162 5,925
Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
26 QUARTERLY REPORT SEPTEMBER 30, 2020
26. FINANCIAL RISK MANAGEMENT
The Company’s financial risk management objectives and policies are consistent with those disclosed in the preceding audited annual published financial statements of the Company for the year ended 30 June 2020.
27. DATE OF AUTHORIZATION
These condensed interim financial statements were approved by the Board of Directors and author- ized for issue on 28 October 2020.
28. CORRESPONDING FIGURES
Corresponding figures have been re-arranged, wherever necessary, for the purpose of comparison. However no significant rearrangment have been made.
29. GENERAL
Figures have been rounded off to the nearest thousand of Rupees unless otherwise stated.
ii) Period end balances
Associated Companies
Trade and other payables 23,868 118 23,986
As At 30 June 2020 (Audited)
Associated Companies
Trade and other payables 14,959 12 14,971
Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICERDIRECTOR
www.suraj.com
T: 92 42 3576 0381 F: 92 42 3576 0376
SURAJ COTTON MILLS LIMITED
SURAJ COTTON MILLS LIMITED
08 Condensed Interim Statement of Profit or Loss (Un-Audited)
09 Condensed Interim Statement of Comprehensive Income (Un-Audited)
10 Condensed Interim Statement of Changes in Equity (Un-Audited)
11 Condensed Interim Statement of Cash Flows (Un-Audited)
12 Selected Notes to the Condensed Interim Financial Statements (Un-Audited)
GOVERNANCE
Company Information
(Chairman)
Chief Financial Officer Muhammad Naeem Sheikh
Audit Committee Humayun Maqbool (Chairman)
Ahsan Bashir (Member)
Adil Bashir (Member)
Adil Bashir (Member)
Humayun Maqbool (Member)
Share Registrar Corptec Associates (Pvt) Ltd. 503 -E,Johar Town , Lahore
Auditors Riaz Ahmad & Co. Chartered Accountants
Company Secretary Haseeb Ahmad
Bankers Allied Bank Limited Habib Bank Limited MCB Bank Limited National Bank of Pakistan MCB Islamic Bank Limited United Bank Limited Dubai Islamic Bank Limited Habib Metropolitan Bank Limited Samba Bank Limited FINCA Microfinance Bank Limited
Registered Office 7-B-III, Aziz Avenue, Gulberg-V, Lahore.
Ph: +92-423-5760379, 35760382 Fax: +92-423-5760376 Email: [email protected] Web: www.suraj.com
Project Locations Nooriabad, District Dadu, Sindh. Kotla Kahloon, District Nankana Sahib, Punjab. Bhaikot, Rawind, District Lahore, Punjab.
3
Directors’ Report
On behalf of Board of Directors, I am pleased to present the operating and financial performance of the company for the first quarter of Financial Year 2021 ended on 30 September 2020.
Pakistan’s economy is showing signs of growth and stability after the COVID-19 pandemic and the textile sector has shown tremendous resilience. Other sectors have also shown a healthy recovery. For the current financial year (FY 2020-21) we hope that the growth cycle will continue and are optimistic about the future outlook.
This pattern is evident in the operating results of your company for the first quarter of FY2021. Compared with the corresponding period, company has achieved revenue growth of 18.27% and financial charges dropped by almost 30% due to recent drop in Policy Rate by SBP. The Company has witnessed a 53.4% increase in profit after tax. Earnings per share for this quarter are 10.16 (FY 2020: PKR 7.10).
Following is the summary of Income Statement for first quarter of FY 2021:
Income Statement Q1 FY-2021 Q1 FY-2020 % Change
(PKR in Million)
Profit before taxation 446 320 39.27%
Taxation (73) (60) 22.07%
Net Profit 373 260 53.40%
Earnings per Share (EPS) 10.16 7.10 Other income increased by 128% on account of realized and unrealized gains due to recovery in the Pakistan equity markets. This recovery is largely due to positive economic fundamentals discussed above. Going for- ward, we expect this positive sentiment to persist and economic activity to gain further momentum.
The new cotton season has started and initial indications show the crop to be far below expectations and it is doubtful that last season’s low crop outturn will be achieved. Inherent issues in the crop cultivation and seed methodology remain with no progress towards any resolution. With the demand for raw cotton ex- pected to be at optimum levels due to improvement in textile demand, it is certain that mills will have to rely on imported cotton to meet their requirements. Pakistan spinning industry has already contracted for large scale imports from nearly all origins in the world. It is imperative that this problem is resolved through new seeds and technology.
A competitive exchange rate parity and fears of COVID-19 in our neighboring countries has made Pakistan prime choice for sourcing textile products globally; strengthening demand in Pakistan. The textile sector is running at full capacity with no dearth of orders and we expect that for the near future demand will remain strong.
In line with our policy of investments in new technology and to take advantage of economies of scale, the Company has decided to set up additional weaving capacity comprising of 154 wide width, high speed looms. Currently we are operating with 120 Looms of same category in our weaving unit producing ap- proximately 15 Million Meters fabric annually and with this addition, our production capacity for fabric would increase by 128%. We expect that this project will be a profitable addition with a payback of about 7 years. Site for the proposed unit is adjacent to the current facilities and is equipped availability of utilities and the necessary technical expertise under one roof. It is expected that the unit will be operational by mid 2021.
4 QUARTERLY REPORT SEPTEMBER 30, 2020
We are committed to focus on our core competencies and our managerial expertise for risk management and continue to try and perform as per the expectations of stakeholders. We are always looking for new op- portunities to expand and diversify and shall keep you apprised of our efforts.
Acknowledgements
On behalf of the Board of Directors, I would take this opportunity to thank all our partners and employees for their continued support. I would also take this opportunity to express my gratitude to the Board for their valuable insights and guidance.
Nadeem Maqbool Chief Executive
October 28, 2020 Lahore
7
8 QUARTERLY REPORT SEPTEMBER 30, 2020
Condensed Interim Statement of Financial Position As At September 30, 2020
Un-Audited Audited
shares of Rupees 10/- each 500,000 500,000
Issued, subscribed and paid up share capital 4 366,713 366,713
Reserves 6,750,230 6,249,900
Deferred taxation 209,633 209,633
Accrued mark-up 28,987 38,592
Unclaimed dividends 6,387 6,731
2,994,301 3,651,369
TOTAL EQUITY AND LIABILITIES 12,801,375 13,011,465
The annexed notes form an integral part of this interim financial information.
CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICERDIRECTOR
9
Investment properties 100,000 100,000
Long term deposits 9 21,871 21,871
5,955,016 5,879,539
Current assets
Stock in trade 11 2,918,119 3,718,268
Trade debts 12 1,268,819 974,012
Loans and advances 13 62,524 55,137
Short term deposits and prepayments 87,238 74,125
Tax refunds due from the government 388,263 537,190
Other receivables 27,592 29,624
6,839,693 7,117,734
6,846,359 7,131,926
September 30,
Gross Profit 505,555 451,320
118,802 124,532
386,753 326,788
Taxation 22 73,212 59,975
Earnings per Share - Basic and diluted (Rupees) 10.16 7.10
The annexed notes form an integral part of this interim financial information.
Condensed Interim Statement of Profit or Loss (Un-Audited) For The Period Ended September 30, 2020
CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICERDIRECTOR
11
Other comprehensive income / (Loss):
Items that will not be reclassified to profit or loss:
Surplus / (deficit) arising on remeasurement of investments at fair value through other comprehensive income 127,664 (14,933)
Items that may be reclassified subsequently to profit or loss
Other comprehensive income / (loss) for the period - net of tax 127,664 (14,933)
Total comprehensive income for the period 500,330 245,257
The annexed notes form an integral part of this interim financial information.
Condensed Interim Statement of Comprehensive Income (Un-Audited) For the period ended September 30, 2020
CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICERDIRECTOR
12 QUARTERLY REPORT SEPTEMBER 30, 2020
Share Capital
Sub total
---------------------------------------------------(Rupees in thousand)--------------------------------------------------
Balance as at 30 June 2019 - (Audited) 366,713 29,000 (240,964) (211,964) 3,714,000 2,199,229 5,913,229 5,701,265 6,067,978
Transactions with owners:
Final dividend for the year ended 30 June 2019 @ Rupees 5.00 per share - - - - - (183,357) (183,357) (183,357) (183,357)
Transfer of gain on disposal of investments held at FVTOCI to retained earnings - - (1,047) (1,047) - 1,047 1,047 - -
Profit for the period - - - - - 719,549 719,549 719,549 719,549
Other comprehensive loss for the period - restated - - 12,443 12,443 - - - 12,443 12,443
Total comprehensive income for the period - - 12,443 12,443 - 719,549 719,549 731,992 731,992
Balance as at 30 June 2020 - (Audited) 366,713 29,000 (229,568) (200,568) 3,714,000 2,736,468 6,450,468 6,249,900 6,616,613
Profit for the period - - - - 372,666 372,666 372,666 372,666
Other comprehensive income for the period - - 127,664 127,664 - - - 127,664 127,664
Total comprehensive income for the period - - 127,664 127,664 - 372,666 372,666 500,330 500,330
Balance as at 30 September 2020 - (Un-Audited) 366,713 29,000 (101,904) (72,904) 3,714,000 3,109,134 6,823,134 6,750,230 7,116,943
The annexed notes form an integral part of this interim financial information.
Condensed Interim Statement of Changes in Equity (Un-Audited) For the period ended September 30, 2020
CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICERDIRECTOR
13
September 30, 2020
September 30, 2019
(Rupees in thousand) CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation 445,878 320,165 Adjustment for non-cash and other items: Depreciation 114,131 123,370 Gain on disposal of property, plant and equipment (8,880) - Net (gain) on short term investment (17,291) (19,610) Provision for Workers' Profit Participation Fund 24,122 - Provision for Workers' Welfare Fund 9,167 - Profit on bank deposits (3,641) - Dividend income (27,914) (13,242) Exchange (gain) / loss (4,345) - Finance cost 32,820 46,870 Cash flows from operating activities before working capital changes 564,047 457,553
Effect on cash flow due to working capital changes (Increase) / decrease in current assets: Stores, spares and loose tools 21,232 18,611 Stock in trade 800,149 708,914 Trade debts (290,462) (178,960) Loans and advances (7,387) (21,902) Trade deposits and short term prepayments (13,113) (21,266) Other receivables 2,032 3,846 Increase in current liabilities: Trade and other payables 32,525 66,567 Net cash from /(used in) working capital 544,976 575,810 Cash generated from /(used in) operations 1,109,023 1,033,363
Finance cost paid (42,425) (40,221) Workers' profit participation fund paid (45,788) - Profit on bank deposits received 3,641 - Income tax paid 75,715 39,619 Net cash from /(used in) operating activities 1,100,166 1,032,761
CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditure incurred (5,532) (11,513) Proceeds from disposal of property, plant and equipment 19,155 - Investments - net (426,714) (1,144,872) Dividend received 27,914 13,242 Net cash used in investing activities (385,177) (1,143,143)
CASH FLOWS FROM FINANCING ACTIVITIES Long term financing - net (1,125) (63,580) (Decrease)/ increase in short term borrowings - net (719,372) (88,866) Dividend paid (344) - Net cash / (used in) from financing activities (720,841) (152,446) Net Increase (Decrease) in Cash and Cash Equivalents
(5,852) (262,828)
Cash and Cash Equivalents at the Beginning of the Period 207,139 433,938 Cash and Cash Equivalents at the End of the Period 201,287 171,110
The annexed notes form an integral part of this interim financial information.
Condensed Interim Statement of Cash Flows (Un-Audited) For The Period Ended September 30, 2020
CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICERDIRECTOR
14 QUARTERLY REPORT SEPTEMBER 30, 2020
1. THE COMPANY AND ITS ACTIVITIES
Suraj Cotton Mills Limited (‘the Company’) was incorporated in Pakistan as a public limited company under the Companies Act, 1913 (now Companies Act, 2017) and is listed on Pakistan Stock Exchange Limited. Its registered office is situated at 7-B-3, Aziz Avenue, Gulberg-5, Lahore. The Company is engaged in the manufacturing, sale and trading of yarn, and fabric.
2. BASIS OF PREPARATION
2.1 These condensed interim financial statements have been prepared in accordance with the account- ing and reporting standards as applicable in Pakistan for interim financial reporting. The accounting and reporting standards as applicable in Pakistan for interim financial reporting comprise of:
• International Accounting Standard (IAS) 34, Interim Financial Reporting, issued by the International Accounting Standards Board (IASB) as notified under the Companies Act, 2017; and
• Provisions of and directives issued under the Companies Act, 2017.
• Where the provisions of and directives issued under the Companies Act, 2017 differ with the requirements of IAS 34, the provisions of and directives issued under the Companies Act, 2017 have been followed.
2.2 These condensed interim financial statements do not include all the information and disclosures required in annual financial statements and should be read in conjunction with the annual audited financial statements of the Company for the year ended 30 June 2020. These condensed interim financial statements are un-audited, however, have been subjected to limited scope review by the auditors and are being submitted to the shareholders as required by the Listed Companies (Code of Corporate Governance) Regulations, 2019 and Section 237 of the Companies Act, 2017.
3. ACCOUNTING POLICIES
The accounting policies and methods of computations adopted for the preparation of these condensed interim financial statements are the same as applied in the preparation of the preceding audited annual published financial statements of the Company for the year ended 30 June 2020.
3.1 Critical Accounting Estimates and Judgements
The preparation of these condensed interim financial statements in conformity with the approved accounting standards requires the use of certain critical accounting estimates. It also requires the management to exercise its judgment in the process of applying the Company’s accounting policies. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
During preparation of these condensed interim financial statements, the significant judgments made by the management in applying the Company’s accounting policies and the key sources of estimation and uncertainty were the same as those that applied in the preceding audited annual published financial statements of the Company for the year ended 30 June 2020.
Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
15
Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
5. LONG TERM FINANCING - secured Opening balance 2,590,654 2,822,597
Acquired/(repaid) during the period / year (1,125) (231,943)
2,589,529 2,590,654
2,480,498 2,533,850
6. TRADE AND OTHER PAYABLES Creditors 474,760 497,864 Advances from customers 51,668 41,902 Accrued liabilities 1,688,613 1,633,950 Payable to employees' provident fund trust 118 12 Income tax deducted at source 3,217 2,573 Fair value of forward exchange contracts - 9,550 Workers' profit participation fund 24,122 45,788 Workers' welfare fund 48,405 39,238
2,290,903 2,270,877
Un-Audited Audited
Un-Audited Audited
No of Shares in Thousand
17,400 17,400 Ordinary shares of Rupees 10 each fully paid up in cash
174,000 174,000
Ordinary shares of Rupees 10 each issued as fully paid bonus shares
19,271 19,271 192,713 192,713
36,671 36,671 366,713 366,713
7. CONTINGENCIES AND COMMITMENTS
Contingencies
i) Guarantees of Rupees 52.277 million (2020: Rupees 47.277 million) are given by the banks of the Company to Sui Northern Gas Pipelines Limited against gas connections, Director Excise and Taxation, Karachi against infrastructure cess and others.
Commitments
i) Contracts for capital expenditure are approximately of Rupees 20.000 million (2020: 20.000 million).
ii) Letters of credit other than for capital expenditure are of Rupees 55 million (2020: Rupees 163.723 million).
iii) Outstanding foreign currency forward contracts are of Rupees NIL (2020: 158.550 million).
Un-Audited Audited September
2020 Note ( Rupees in thousand )
8. PROPERTY, PLANT AND EQUIPMENT Operating fixed assets - tangible 8.1 4,829,185 4,940,565 Capital work-in-progress 8.2 71,108 71,076
4,900,293 5,011,641
8.1 Operating fixed assets - tangible Opening book value 4,940,565 5,327,574 Add: Additions during the period / year -cost 8.1.1 5,500 133,678
4,946,065 5,461,252 Less: Deletions during the period / year - vehicles (2,749) (21,057)
4,943,316 5,440,195 Less: Depreciation during the period / year 114,131 (499,630) Book value at the end of the period / year 4,829,185 4,940,565
8.1.1 Additions during the period / year - cost Plant and machinery 4,000 77,441 Electric installation - 17,642 Vehicles 1,500 38,595
5,500 133,678
8.1.2 Capital Work in Progress Buildings on freehold land 29,457 29,425 Plant and machinery 31,109 31,109 Electric installations 10,542 10,542
71,108 71,076
Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
17
Note ( Rupees in thousand )
9. LONG TERM INVESTMENT Investments in joint ventures - under equity method 70,883 70,883
Equity instruments - at FVTOCI 861,969 675,144
932,852 746,027
10. STORE , SPARE PARTS AND LOOSE TOOLS Stores 212,120 217,644
Spares parts 8,019 11,205
Loose tools 193 250
Stores in transit 2,384 14,849
222,716 243,948 Less: Provision for slow moving, obsolete and damaged store items
(40,306) (40,306)
182,410 203,642
Raw material 1,805,322 2,182,402
Finished goods 852,797 1,346,739
12. TRADE DEBTS Secured against letters of credit 53,160 43,788
Unsecured 1,301,666 1,016,231
1,268,819 974,012
Advances to suppliers 48,167 41,555
Letters of credit 5,391 7,009
Due from related parties 2,859 62
62,524 55,137
14. INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS Equity investments 14.1 152,684 150,502
Mutual funds 14.2 1,550,757 1,168,095
1,703,441 1,318,597
Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
18 QUARTERLY REPORT SEPTEMBER 30, 2020
Un-Audited Audited September
Note ( Rupees in thousand )
14.1 Securities held at fair value through profit or loss Carrying value 124,273 126,621 Unrealised gain / (loss) 28,411 23,881
152,684 150,502
14.2 Mutual funds HBL Cash Fund 285,590 181,681 Alfalah GHP Money Market Fund 208,163 204,561 MCB Cash Management Optimizer 248,721 245,034 NBP Money Market Fund 188,131 185,548 ABL Cash Fund 180,393 177,842 ATLAS Money Market Fund 175,759 173,429 UBL Asset Management 264,000 -
1,550,757 1,168,095
Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
19
-------------------------- ( Rupees in Thousand ) --------------------------
Inter Segments (619,977) - (619,977) (609,899) - (609,899)
2,678,798 1,372,005 4,050,803 2,157,707 1,267,231 3,424,938
15.1 Disaggregation of the Company's revenue from contracts with customer is as follows.
Segments
Sale of waste 150,699 5,044 155,743 192,995 6,966 199,961
Inter-segment eliminations (619,977) - (619,977) (609,899) - (609,899)
Total revenue from contracts with customers 2,678,798 1,372,005 4,050,803 2,157,707 1,267,231 3,424,938
Geographic markets
China - - - 115 115
Portugal 18,300 18,300 -
South Korea - 5,245 5,245 -
2,678,798
1,372,005
4,050,803
2,157,707
1,267,231
3,424,938
Timing of revenue recognition
Goods transferred at a point in time 2,678,798 1,372,005 4,050,803 2,157,707 1,267,231 3,424,938
Total revenue from contracts with customers
2,678,798
1,372,005
4,050,803
2,157,707
1,267,231
3,424,938
Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
20 QUARTERLY REPORT SEPTEMBER 30, 2020
Un-Audited September
( Rupees in thousand )
16. COST OF SALES Raw material consumed 2,252,164 2,521,289 Sizing expenses 15,383 18,324 Stores, spares and loose tools consumed 67,237 69,955 Packing materials consumed 35,816 35,631 Salaries, wages and other benefits 238,204 237,019 Fuel and power 340,185 377,775 Repairs and maintenance 19,640 13,434 Insurance 7,781 7,461 Other factory overheads 5,492 5,428 Depreciation 107,053 116,676
3,088,955 3,402,992
Finished goods:
Clearing and forwarding 1,273 1,273
Export development surcharge 236 109
36,762 32,381
Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
21
30, 2019 ( Rupees in thousand )
18. ADMINISTRATIVE EXPENSES Salaries and other benefits 27,489 27,011 Rent, rates and taxes 2,559 1,748 Electricity and gas 2,570 2,202 Traveling and conveyance 777 2,785 Repair and maintenance 2,031 1,226 Vehicle running and maintenance 1,616 1,884 Printing and stationery 538 1,642 Communication 568 479 Fee and subscription 1,009 883 Insurance 692 581 Depreciation 7,077 6,695 Entertainment 64 27 Donation 15 5,000
47,005 52,163
19. OTHER OPERATING EXPENSES Workers profit participation fund 24,122 17,195 Workers welfare fund 9,166 6,534 Impairment loss on short term investment - 14,416 Others 1,747 1,843
35,035 39,988
20. OTHER OPERATING INCOME Exchange gain / (loss) 4,345 - Profit on bank deposits 3,641 5,095 Dividend income 27,914 32,852 Net gain on short term investment 17,291 - Sale of empties and scrap 1,463 2,300 Gain on disposal of operating fixed assets 8,880 - Unrealised gain on re-measurement of investments at fair value through profit or loss 28,411 -
91,945 40,247
21. FINANCE COST Interest / mark-up on: Long term financing 17,216 23,470 Short term borrowings 13,323 21,919 Bank charges and commission 2,281 1,481
32,820 46,870
73,212 59,975
Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
22 QUARTERLY REPORT SEPTEMBER 30, 2020
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Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
23
Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
24 QUARTERLY REPORT SEPTEMBER 30, 2020
24. RECOGNIZED FAIR VALUE MEASUREMENTS - FINANCIAL INSTRUMENTS
(i) Fair value hierarchy
Judgements and estimates are made in determining the fair values of the financial instruments that are recognised and measured at fair value in these condensed interim financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the following three levels. An explanation of each level follows underneath the table.
Recurring fair value measurements at 30 September 2020 - Un-audited
Level 1 Level 2 Level 3 Total
( Rupees in Thousand )
2,565,210 - - 2,565,210
Level 1 Level 2 Level 3 Total
( Rupees in Thousand )
1,993,541 - - 1,993,541
The above table does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amounts are a reasonable approximation of fair value. Due to short term nature, carrying amounts of certain financial assets and financial liabilities are considered to be the same as their fair value. For the majority of the non-current receivables, the fair values are also not significantly different to their carrying amounts.
Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
25
There were no transfers between levels 1 and 2 for recurring fair value measurements during the half year ended 31 December 2019. Further there was no transfer in and out of level 3 measurements.
The Company’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.
Level 1: The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and equity securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the Company is the current bid price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities.
(ii) Valuation techniques used to determine level 1 fair values
Specific valuation technique used to value financial instruments was use of quoted market prices.
25. TRANSACTIONS WITH RELATED PARTIES The related parties comprise associated companies, key management personnel and provident fund trust. The Company is in the normal course of business carries out transactions with various related parties. Detail of transactions with related parties are as follows:
Period Ended September
30, 2020 September
i) Transactions Associated companies
Purchase of electricity 1,472 92 Sale of goods 11,642 16,061 Purchase of goods 8,058 34,480 Insurance expense 28,901 37,164 Key management personnel Remuneration paid to Chief Executive Officer, Director 11,986 11,030 Other related parties Company’s contribution to provident fund trust 6,162 5,925
Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
26 QUARTERLY REPORT SEPTEMBER 30, 2020
26. FINANCIAL RISK MANAGEMENT
The Company’s financial risk management objectives and policies are consistent with those disclosed in the preceding audited annual published financial statements of the Company for the year ended 30 June 2020.
27. DATE OF AUTHORIZATION
These condensed interim financial statements were approved by the Board of Directors and author- ized for issue on 28 October 2020.
28. CORRESPONDING FIGURES
Corresponding figures have been re-arranged, wherever necessary, for the purpose of comparison. However no significant rearrangment have been made.
29. GENERAL
Figures have been rounded off to the nearest thousand of Rupees unless otherwise stated.
ii) Period end balances
Associated Companies
Trade and other payables 23,868 118 23,986
As At 30 June 2020 (Audited)
Associated Companies
Trade and other payables 14,959 12 14,971
Selected Notes to the Condensed Interim Financial Statements (Un-Audited) For The Period Ended September 30, 2020
CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICERDIRECTOR
www.suraj.com
T: 92 42 3576 0381 F: 92 42 3576 0376
SURAJ COTTON MILLS LIMITED